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May 17 2013

The Wall Street Journal - Target Opens Tech Innovation Center in SF

 

By Rachel King

 

SAN FRANCISCO — Target Corp. on Friday officially opened a new technology innovation center in San Francisco, joining a growing number of companies, including General Electric Co. and rival Wal-Mart Stores Inc., which have opened new software development operations in the Bay Area over the last two years.

 
Established companies are turning to Silicon Valley real estate for a lot more than the weather. Access to talent, a more entrepreneurial approach to technology, and a less risk-averse approach to application development are among the reasons many companies are locating so-called centers of innovation in the area. Integrating the fruits of those centers with the company’s traditional IT, and meshing with a different corporate culture could pose problems, but the need to stimulate growth and infuse new thinking into IT are of paramount concern.

 

“Retail is undergoing a major revolution, and technology is more strategic than ever,” said Beth Jacob, executive vice president and chief information officer at Target. Ms. Jacob spoke at the opening of the office in the historic Folgers Coffee Company Building. But innovations concocted by employees working at this new innovation center will need to get final approval from executives at corporate headquarters in Minneapolis before they get implemented, illustrating the challenge faced by established companies looking to inject some Silicon Valley mojo into their operations.

 
Nearly 20 employees work here, in an open, light-filled office with walls that double as dry-erase boards. The team has been quietly operating here for 7 months, but moved out of the office so it could be renovated. This is the team’s first week back in the office.

 

The company plans to look at a variety of technology innovations that impact its core commerce, such as the search experience on its e-commerce site, and the use of social networking sites. Target will also look at emerging technologies that integrate or overlay data with smartphones and wearable computing devices. Ms. Jacob said the company hopes to personalize the shopping experience both online and in stores for a range of customers. For instance, it could allow tech-savvy hipsters to use an augmented reality smartphone app to see which foods in a particular aisle are gluten free. Other applications could be developed for less sophisticated shoppers as well.

 

Executives hope that the innovation center will not only introduce the company to new technologies, but also help accelerate the rate of the company’s technology adoption. Target wants to adopt the Silicon Valley model of becoming more agile — of writing and delivering code iteratively rather than waiting for one big rollout, of failing fast and often, in order to get positive results more quickly — and Ms. Jacob says the company is willing to risk making mistakes along the way. “Risk-taking is a part of the Target culture from a design standpoint,” Ms. Jacob said. “From a tech perspective, we are [also] willing to do that.”

 

Much like Target partners with fashion designers to create branded goods inside its stores, the company plans to use that same model for technology innovation. Target’s innovation center was built in partnership with SapientNitro, an interactive marketing, creative design and technology services agency, which has an office located next to Target’s. SapientNitro has helped Target in a number of technology initiatives over the past four years, including reengineering Target.com and moving it from Amazon Web Services in 2011 to servers managed by the retailer. Target also has partnerships with hundreds of technology companies, including Google Inc. and eBay Inc., with which it works to offer same-day delivery in select stores.

 

Target says its ability to work effectively with partners both large and small will be particularly helpful in Silicon Valley, as it works with early-stage technology startups. That capability will be put to the test, as some of the most advanced innovation comes from early-stage companies.


 
The bigger challenge for Target will be to incorporate innovations spawned at its innovation center into stores and across the larger IT organization.  Ms. Jacob says that the team staffing the new San Francisco office will be given freedom to seek out new ideas. Yet, the last word will come from Ms. Jacob, who works in Minneapolis and oversees all technology at Target, both internal and customer-facing. “The ideas that are generated here are going to get integrated back into the larger organization very quickly,” she told CIO Journal in an interview following the event. 

 

blogs.wsj.com

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